On U.S. visit, China's president seeks to reassure on trade, security

Michael Martina, Alwyn Scott, Eric M. Johnson

7 Min Read

SEATTLE (Reuters) - Chinese President Xi Jinping, facing a skeptical audience on the first day of a week-long U.S. visit, sought to reassure business and government officials on Tuesday over a long list of irritants, from economic reform to cyber attacks, human rights and commercial theft.

Xi, delivering a keynote address to some 650 business executives and other guests in Seattle, touched on a litany of issues that have strained U.S.-China ties.

China will not manipulate its currency to boost exports and will never engage in commercial theft, he said, adding it will not discriminate against foreign businesses, will speed its market opening and make efforts to improve human rights.

“If China and the U.S. cooperate well, they can become a bedrock of global stability...,” Xi said. “Should they enter into conflict or confrontation, it would lead to disaster for both countries and the world at large.”

However, despite his reassuring comments, Xi faces questions about actual government policies. He will likely be pressed for specifics as he meets this week with tech and other top business leaders before attending a black-tie state dinner at the White House hosted by President Barack Obama.

About 100 people gathered in downtown Seattle earlier on Tuesday to protest against human rights abuses in China, the first of what could be a series of demonstrations against Xi’s visit.

Xi’s U.S. visit ends with an address at the United Nations.

LEVEL PLAYING FIELD

Xi came under a barrage of criticism before his speech over China’s treatment of U.S. businesses operating in his country.

“This week a number of significant deals are being announced alongside President Xi’s visit that exemplify American companies’ commitment to support China’s development both with capital and with world-class technologies,” said U.S. Secretary of Commerce Penny Pritzker.

“Nevertheless, we and our companies continue to have serious concerns about an overall lack of legal and regulatory transparency, inconsistent protection of intellectual property, discriminatory cyber and technology policies, and more generally the lack of a level playing field across a range of sectors.”

John Frisbie, president of the U.S.-China Business Council, a co-sponsor of Tuesday’s event, said the group’s latest survey of its members “shows a continued steady erosion of confidence in the China business outlook.”

Writing in an article in China Business Review before Xi arrived, Frisbie said: “China’s ambitious economic reform program is entering its third year, but with little impact so far on the issues faced by American companies — put simply, China has yet to begin removing market-access barriers across many sectors of China’s economy and build a fairer competitive environment. Business is looking for tangible signals of reforms, but not getting it.”

Scott Kennedy, Director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies in Washington, D.C., praised Xi’s strategy.

“Xi played a very good hand,” Kennedy said. “He gave comprehensive verbal reassurance combined with limited actual concessions. This will avoid full-blown reaction from the U.S. government and the business community.”

CYBER SPYING ACCUSATIONS

Responding to allegations that China has been behind cyber attacks affecting U.S. business and government databases, Xi reiterated that China, too, had often been a victim.

“The Chinese government will not in whatever form engage in commercial thefts or encourage or support such attempts by anyone,” Xi vowed.

White House officials said cyber spying will be a key part of discussions between Obama and Xi, but they did not expect the United States to level economic sanctions against China for cyber espionage ahead of Xi’s arrival in Washington.

No mention has been made during the early stages of Xi’s visit about an American businesswoman held for six months in China on suspicion of spying and stealing state secrets.

Xi said China’s economy was on course for fast growth and Beijing remained committed to financial reforms and an open economy.

“China will not go backward in this process,” Xi said at a forum for U.S. and Chinese governors in Seattle.

The Chinese president faces questions about his stewardship of the economy, which has been slowing after years of rapid growth, and about his government’s heavy intervention in stock markets after key indexes tumbled over the summer.

The United States will urge Xi to avoid “quick fixes” for its economy, such as devaluing its currency, to boost exports, White House chief economist Jason Furman told Reuters.

China’s recent loosening of controls on the yuan currency “caused turmoil” in global financial markets and U.S. officials plan to raise the issue of China’s volatile stock market, Furman said on Tuesday.

Xi said: “We are against competitive depreciation, or currency war, and will not lower the renminbi exchange rate to spur exports.”

‘NO HOUSE OF CARDS’

Xi’s meetings with Obama and U.S. business leaders offer the chance to bolster the president’s stature at home, building on a high-profile military parade earlier this month to mark the end of World War Two, while deflecting attention from China’s recent stock market rout, slowing economy and a chemical explosion at a Tianjin warehouse that killed more than 160 people.

Xi said the Chinese people supported his anti-corruption campaign, which has touched every level of the government, Communist Party and military. The crackdown would continue and was not a product of factional struggles, he said.

“There is no power struggle in this. There is no House of Cards,” Xi said, drawing laughter from the audience with his reference to the popular U.S. political drama.

In a reminder of potential flashpoints in ties, however, the Pentagon said on Tuesday that a Chinese aircraft performed an unsafe maneuver during an air intercept of a U.S. spy plane off China’s northeast coast last week.

Among the few concrete agreements expected to result from the Obama-Xi summit has been a confidence-building plan aimed at reducing the risk of aerial collisions between warplanes in areas such as the South China Sea through adoption of common rules of behavior.

Additional reporting by David Brunnstrom and Matt Spetalnick; Writing by Ken Wills; Editing by Lisa Shumaker and Paul Tait